Bernat Camps Adrogué

The European Fund for Sustainable Development Plus: Maximising the EU Guarantee for Leverage and Impact With increasing pressure on European development budgets, optimizing the efficiency and impact of the European Union’s concessional finance is critical. This paper examines how the European Fund for S...

With increasing pressure on EU development budgets,optimising the impact of the EU’s concessional finance is critical. Check out this paper we have put together with @cgdev.org colleagues on how the EFSD+ guarantee instrument can be strengthened to support EMDEs better. www.cgdev.org/publication/...

Here waiting for Moody's, S&P and Fitch to put the US on watch...

Indeed... and also indicative of Senegal's position which received 3-notch downgrade in less than 6 months (+ an extra 30% probability according to Moody's to be downgraded in the next year, compared to less than 15% of all B3-rated issuers)

Minor correction which makes it tougher, B3 from B1...

African Financing Stability Mechanism (AFSM) Technical and Operational Report

The African Financing Stability Mechanism (AFSM) technical and operational report is finally out! Africa is the only continent without a Regional Financing Arrangement, making this initiative a game changer to address African financial vulnerabilities. www.afdb.org/en/documents...

Main Takeaways on Debt from the Annual Meetings Sovereign debt issues for emerging markets and developing economies (EMDEs) were a predictable subject of many conversations at the World Bank and IMF Annual Meetings in Marrakech. Here are our main t...

Sovereign debt issues for EMDEs were a predictable subject of many conversations at the WB-IMF Annual Meetings. In a new CGD blog, Masood Ahmed, Hannah Brown & I share our takeaways on the state of play and how to make progress to address urgent needs. cgdev.org/blog/main-ta...

Does SDR Recycling Impair Reserve Management? The Case of the United Kingdom In the wake of a challenging year, the Bank of England (BoE) has found itself navigating a tumultuous economic landscape marked by significant upheavals. Following the release of the mini-budget in Se...

Does SDR recycling impair reserve management? In a new
Center for Global Development note, Mark Plant and I show that the UK can manage its reserves well and recycle SDRs to vulnerable countries, but the IMF can learn from this case to reform the VTA choice mechanism. www.cgdev.org/publication/...

One issue - rightfully flagged by @bernatcamps.bsky.social on the other platform - is missing from the op-ed. Low income countries are sheltered from surging SDR interest but not completely because if they drew on their SDR allocations it's akin to a perpetual loan with a variable rate (the SDRi)...

Empty Words, Empty Wallets: The G20’s Broken Promise on SDR Recycling In August 2021, as the world continued to grapple with the far-reaching effects of the ongoing global pandemic, the International Monetary Fund (IMF) took a significant step to help. Recognizing the u...

Two years after the G20 commitment to recycling US$100 billion worth of SDRs to vulnerable nations, pledges still fall short and less than 1% of the promised support reached vulnerable economies. Here's an update from Mark Plant and me: www.cgdev.org/blog/empty-w...

Press release: www.rockefellerfoundation.org/news/marrake...

Funding Hybrid Capital at the AfDB is the Best Deal for SDR Donors Many advanced-economy countries are looking for ways to recycle their excess Special Drawing Rights (SDRs) to support more vulnerable countries whose economies are being buffeted by the economic after...

-Next steps: COP28 presidency offering full support to showcase the proposal at a high-level event on Finance Day on December 4th during COP28. The AfDB and IDB did a great job developing this proposal, now it's time for donors to step up.
www.cgdev.org/blog/funding...

- France confirmed its participation in the SDR rechanneling to MDBs through the Liquidity Support Agreement
- The participants agreed to establish a working group to identify contributions ASAP and resolve the remaining technical issues faced by donors

On October 13th, CGD, the AfDB, the IDB, and the Rockefeller Foundation hosted a high-level meeting to discuss the rechanneling of SDRs to MDBs. Key takeaways from the PR:
- Representatives from the IMF noted that in the Staff's view, the hybrid capital proposal meets the Reserve Asset Status!

Do Financial Markets Reflect Climate Risks? Widespread climate shocks, from heatwaves and droughts to hurricanes and coastal flooding, affect nations across all income levels, with profound implications for economic growth and human welfare. Wi...

And the blog summarising the findings (but as always, recommend reading the whole thing): www.cgdev.org/blog/do-fina...
4/4

This implies a triple whammy of challenges for emerging market economies as they confront the economic damages of climate change, the high fiscal costs of climate adaptation, and high borrowing costs. 3/4 Link to the paper: www.cgdev.org/publication/...

Findings: 1- We find that changes in climate debt are an important determinant of spreads, but only in emerging economies. 2- Countries with high vulnerabilities and low resiliency to climate change also pay higher spreads. 2/4

Climate Change and Government Borrowing Costs: A Triple Whammy for Emerging Market Economies Climate change is a systemic risk to the global economy. While there is a large body of literature documenting the potential economic consequences of climate change, there is relatively little researc...

New CGD Working Paper - Climate Change and Government Borrowing Costs: A Triple Whammy for Emerging Market Economies. We investigate the impact of both climate debt and climate vulnerability/resilience on sovereign bond yields and spreads in AE and EM using a novel dataset. 1/4

Whither or Wither the PRGT? Funding Options for a Cash-Strapped PRGT The IMF’s Poverty Reduction and Growth Trust (PRGT) faces large financing needs. Unprecedented levels of lending since the start of the pandemic – four to five times higher than before the pandemi...

However, I do agree with the call for donors to close the gaps in PRGT resources. The PRGT is key for LICs and although donors made a great effort during AM to close these gaps, there's still room for a bigger PRGT. www.cgdev.org/publication/...

Most of the chunk of PRGT-eligible countries still have room to borrow more under the PRGT as the limit is currently at 435%. What could be raised is the annual limit currently set at 145% so countries can borrow more under the PRGT per year.

3) I only partly disagree with aligning PRGT access thresholds with those of the GRA. In the March review, GRA access limits were raised but not for the PRGT due to the lack of subsidy resources. Although I think it's a great initiative, it will likely have no impact(table below)

Running on Empty: Why the PRGT’s Subsidy Resources Need to be Replenished Soon Current resources for the IMF's PRGT are not sufficient to support continued high demand. The problem is the lack of subsidy resources, which has worsened markedly in the current environment. Donors w...

The IMF struggled to find subsidy resources and still needs to meet the updated subsidy pledge, expanding eligibility for the PRGT will only worsen the problem.
www.cgdev.org/blog/running...

2) I don't think the Fund should relax the PRGT eligibility criteria. There are already 70 countries eligible for the PRGT (only 6 less than IDA), adding more countries will likely crowd out programs that should go to the countries that need this the most.

I must say I disagree with some of the remarks made by the Governor of the Bank of Ghana on the PRGT.
Short thread
1) Surcharges only apply to borrowing from the GRA, lending under the PRGT comes without surcharges (although yes, eliminate surcharges for GRA)
www.businessghana.com/site/news/Bu...

Chair's Statement: Forty-Eighth Meeting of the IMFC We express our deepest condolences to the people of Afghanistan and Morocco for the tragic loss of life and widespread destruction caused by the recent devastating earthquakes. We also express our dee...

10: Last but not least, The IMFC calls for the creation of a 25th chair on the IMF EB for Sub-Saharan Africa to improve Africa's voice and representation on the board.
Link to the statement: www.imf.org/en/News/Arti...

9: On debt, it welcomes progress in Zambia, Sri Lanka, and Suriname, but calls for progress in Ghana, Ethiopia, and Malawi. It also supports stronger creditor coordination for debt restructuring in LICs and MICs outside the CF.

The Resilience and Sustainability Facility’s Recent Programs Still Fall Short of its Ambitious Goa... In an earlier paper (and blog) published in March, we assessed the initial five programs supported by the IMF’s the Resilience and Sustainability Trust (RST), a new financing vehicle designed to hel...

8: Some news for the RST. So far,it's been focused on climate change but the statement mentions the operationalization of the pandemic preparedness aspect of the trust. We'll see how that goes as the results so far from the climate part are not encouraging. www.cgdev.org/blog/resilie...

7: The statement also points out the subsequent comprehensive review of the PRGT facilities. This great paper from David Andrews explores what funding options the IMF could explore, TL;DR there are no easy options. www.cgdev.org/publication/...

6: Also on the PRGT, there will be a review of the PRGT access limits. This is great news as when the fund increased the access limits for the GRA on March 2023, they said they couldn't do so for the PRGT as there weren't enough subsidy resources. www.imf.org/en/Publicati...

5: IMFC Chair claims victory for the closure of the Stage 1 fundraising gaps for the subsidy and loan accounts of the PRGT. BUT, it's not clear enough if that is the 2021 target or the updated one which accounts for higher SDRi (likely to be the 2021 one). www.cgdev.org/blog/running...

3: Following the completion of the 16th General Review of quotas, they call on the fund to review the GRA Access Limits (which has implications on lending and surcharges).
4: FINALLY, "we will consider a review of surcharges policies".